Engineering news
The government has released further details of its plans to set up a business bank aimed at helping smaller firms to access finance, saying the venture will manage £3.9 billion of resources.
Business secretary Vince Cable said the aim is to provide a comprehensive package of support by bringing together different schemes.
Many of the measures will require European Commission approval, but Cable set out a timetable for the rest of the year, which included trials of new finance products.
He said £300 million of investment will be committed by the end of the current financial year and that a company will be set up in 2014 to house the bank's programme, and appoint a chairman and board.
Cable said: “This institution will bring together £1 billion of new government capital and £2.9 billion of existing capital which will work alongside private sector contributions with the potential to be enhanced by guarantees.
“Inadequate access to finance for small and medium-sized enterprises is one of the biggest risks to economic recovery. We need bold action to fix what has always been a weakness of the UK economy, and since the financial crisis has become an urgent problem.
“Whilst we are making great strides to reform the banking system, more needs to be done to ensure that it sufficiently serves the manufacturers, exporters and high-growth firms that drive economic growth.”
Lee Hopley, chief economist at EEF, the manufacturers' organisation, commented: “Government intervention to support lending to businesses is still a high priority for growth, so it is positive to have some detail on the new business bank. Acting as a central point to focus for all existing finance initiatives should make the whole offer to business clearer and more accessible.
“As we saw in the budget, there are limited new resources so maximum firepower needs to be deployed to tackle the biggest obstacle holding back small firms – getting the finance they need to invest and grow.”
Katja Hall, the CBI's chief policy director, said: “This should give confidence to businesses that there is now a long-term solution to plug the finance gap.
“Businesses didn't want a host of new finance initiatives introduced as part of the business bank but simplification of existing support.
“Bringing all government financial support and advice initiatives under one roof will improve access for smaller firms, helping them fulfil their growth potential.”
TUC general secretary Frances O'Grady said: “It's great to see progress continuing to be made on the government's British business bank.
“But having recognised the need for a state investment bank, the Chancellor should be far bolder and give it the resources needed to support businesses on a far larger scale.”